Risk perception in renewable energy financing - A survey of bankers in India

Abstract

India's Nationally Determined Contributions targets a 40% share of renewable Electricity by 2030 and a cumulative capacity of 175 GW by 2022. Investment requirement at this scale goes beyond implementation of renewable energy Programs by several states have faced difficulties in mobilizing finance for projects due to risks perceived by investors. This study investigates how investors perceive risks in the Indian context as well as the drivers that influence such perception. Among the different types of investors, the study focuses specifically on debt providers. The study synthesises the multidisciplinary nature of 'risk perception' as a construct and operationalizes it within the renewable financing domain. It further explores risk perceptions and factors that influence it through a survey of bankers. The data collected are interpreted through both descriptive analysis and exploratory factor analysis. Results indicate that bankers perceive contractual risks concerning power purchase agreement and regulatory uncertainties as significant risks. Furthermore, factors related to Experience and Capacity, familiarity, electricity sector environment and infrastructure financing exposure emerge as significant contributors to risk perception